Former BP Boss Tony Hayward Enjoys the Small Time

Former BP Chief Executive Tony Hayward on British television in 2010, at the height of the Gulf of Mexico oil-spill debacle. Mr. Hayward has scaled down with a new gas-to-liquids venture.

Reuters

In the oil industry, small is rarely beautiful.

Massive oil finds, economies of scale and megaprojects have long dominated thinking in the sector.

But one company sees an opportunity in scaling down. And it’s run by a man who knows all about going from large to small.

Tony Hayward was boss of BP PLC until the infamous Gulf of Mexico oil spill led to his resignation in 2010. He has since re-emerged in several guises, most notably as chairman of mining giant Glencore PLC.

Also in his new portfolio is CompactGTL, a company that sees potential profit turning natural gas into higher-value liquids such as synthetic crude and diesel.

To date, this business has mostly been the preserve of oil majors with the funds and know-how to turn to gas to liquids (GTL) on an industrial scale—for example at Royal Dutch Shell PLC’s $19 billion Pearl GTL plant in Qatar.

Lately, even Shell has balked at repeating the experience, ditching its plans to build a costly facility in the U.S.

“The holy grail for the industry is to find a way of scaling the technology so you can deploy it locally,” said Mr. Hayward, who chairs CompactGTL.

Instead of connecting up to a giant gas field, CompactGTL sees opportunities in making synthetic diesel from gas produced as a byproduct of oil extraction. Currently, much of that gas is simply burned off, or “flared.”

Potential markets for such technology exist in places like North Dakota, where a surge in shale-oil production has also increased flared gas in recent years.

CompactGTL plans to start construction next year on a $300 million plant in Kazakhstan that will convert gas into synthetic crude and potentially diesel. The plant, on a plot the size of a soccer field, will take around two years to build and will eventually produce around 3,000 barrels a day of liquids, the company says.

Compare that with Shell’s Pearl plant, which took a 40,000-strong workforce five years to build on a 618-acre site—an area the equivalent of more than 300 soccer fields.

Comments (1 of 1)

This kind of technology is probably too expensive to work in most markets. I would recommend http://www.cleanfuel-dme.com as it is significantly cheaper and the DME goes into LPG quite easily. The syn-diesel that FT-based technology players use has to be blended as it is too light for regular automotive use.